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Benevolent billionaires - why do they do it?

Amanda Bryan

Self-interest is at the heart of many a philanthropist's motivation, according to Aussie entrepreneur Dick Smith. Illustration: Matt Davidson

They have been hailed as the billion-dollar givers by Forbes in a new list of the world's most benevolent billionaires, but what inspires super-rich people to give most of their money away? Is it guilt, glory or simply the joy of giving?

Topping the 23-strong list is Microsoft founder Bill Gates, who according to Forbes has so far given nearly half of his $US66 billion ($A63.5 billion) fortune away. His outlook on life seems to be a motivating factor.

“We are impatient optimists by nature: we see the glass as 'half full' and are motivated to confront problems that others consider impossible to solve,” his foundation website states.

Others, including US magnate Warren Buffett, who has donated $17 billion to date, and Rams Home Loans founder John Kinghorn, who has donated $300 million, have said they don't want to leave their children disablingly rich.

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Given the flak Australia's jet set often cop for being less charitable than their overseas counterparts, the issue of motivation is key.

Australian millionaire entrepreneur and noted philanthropist Dick Smith says that for him it's the feel-good factor.

“I give out of self-interest. It makes me feel good,” he says. “My giving is totally selfish, and I've never claimed anything else. I think it generates karma, and if you feel OK within yourself, that allows you to be successful.”

He's not alone in enjoying the buzz of benevolence. For the past year or so a mysterious British millionaire has been shelling out £1000 ($A1500) a day to random people on the street to spend on something “good” and documenting the results at the website we-are-lucky.com.

Even toddlers think giving is pleasurable, according to a recent study published in the online journal PLoS One. It found children under two were happier when giving treats to others than they were receiving treats themselves.

Scientists have found time and again that altruism triggers the pleasure centres of the brain, but the mechanisms are mysterious and multifaceted, according to Stanford University's Centre for Compassion and Altruism Research.

DNA is thought to play a part. Earlier this year, US researchers linked generous and civic-minded personality traits to receptor genes for the hormones oxytocin and vasopressin in a study published in Psychological Science.

However, Dr Anthony Grant, director of the Coaching Psychology Unit at the University of Sydney, says stage of life is also an important factor.

Most business high-flyers work very hard to make lots of money in the initial stages of their career and at that time accumulating personal wealth is an important goal in itself, says Grant, who has coached a number of Australia's corporate leaders.

He says that once people reach a household income of about $150,000, however, the happiness that money alone can bring starts to level off.

“At that point, it's easy to get deluded by traps like having the latest iPad mini or Mercedes," he says. "But money is only a pathway goal, so when you focus on only that you neglect higher order values that give meaning to those goals.”

If wealthy people continue down that road, says Grant, they can get disenchanted and disaffected, and start to wonder why they endured all the turmoil and difficulty along the way.

Then they discover that giving away money offers new meaning and purpose to their struggle.

“That's why rich people often give away lots of money at the end of their career,” he says.

This doesn't apply only to the wealthy. One US man took this to extremes and has been living without money for more than a decade. In 2000, Daniel Suelo, aged 39, dumped his last $30 in a phone booth. He now lives currency-free in the Utah wilderness.

According to Suelo's blog, his mission is to stay free from the illusion of money. “Wild nature, outside commercial civilisation, runs on gift economy: freely give, freely receive,” he writes.

Dick Smith feels that many of Australia's richest people remain stuck in the illusion. He says that these days most thumb their nose at philanthropy.

He says that as the gap between rich and poor widens, those at the wealthiest end of that spectrum are obliged to give back – and they should do so publicly.

“If you are fulfilling an obligation, it shouldn't be a secret,” he says.

In countries such as the US, Smith says, high-net-worth people who don't give back become social pariahs. Rich Australians, on the other hand, seem to get away with it.

“I know wealthy people worth hundreds of millions who proudly say they give nothing to charity,” he says. “Here it's all about showing off - running a bigger company, having a bigger boat or owning a bigger waterfront."

A few years ago, Queensland University of Technology released a report that found a “sizeable proportion” of wealthy Australians gave little, if anything, to charitable causes.

It also found that Australia's affluent, on average, gave at a lower level than their counterparts in comparably affluent countries such as Britain, Canada and the US.

The latest numbers seem to support this. There were no Australians, for instance, on Forbes' billion-dollar givers list. Australia's mega-rich, it seems, are more likely to be found on the more modest million-dollar givers list.

FR&C, an Australian firm specialising in prospect and donor research and consulting, lists 200 individuals and families who have publicly disclosed Australian donations of more than $1 million.

48 comments so far

I think you'll find Australia's attitude to sharing in general is quite poor. All you have to do is start a conversation on welfare and people start tearing others to shreds for simply needing a hand.

Our mega-rich (some, not all) seem to be of the illusion that their job is keep "growing the business" and make "the business" lots of money, but that is a fallacy. The "business", and by extension, the "economy" are not self-benefiting beasts, they are invisible human structures, created to benefit the people, soley to share and redistribute wealth. The "economy" is not there to benefit itself, although I'm sure many will try and fool us otherwise.

Commenter

Miffy

Date and time

November 26, 2012, 10:50AM

"I think you'll find Australia's attitude to sharing in general is quite poor. All you have to do is start a conversation on welfare and people start tearing others to shreds for simply needing a hand"

I think the attitude towards welfare is a completely different beast to philanthropy/sharing. I admit I hate welfare and look down on long term welfare recipients. Why? Because I've known far too many people who rely on Welfare and play/cheat the system and then brag about it. Or people who live comfortably on welfare for many years never intending to work and support themselves. I admit I am jealous since I've never received a cent, while I watch people making more money than me collecting welfare as they cheat the system. As for the mega rich, they probably share their wealth because they have a genuine chance to make a difference in the world and leave a legacy. A regular well off millionaire cant really achieve much so don't see the point in giving, but a Billionaire can literally change the world

Commenter

Mick

Location

Melb

Date and time

November 26, 2012, 3:42PM

""I think you'll find Australia's attitude to sharing in general is quite poor. All you have to do is start a conversation on welfare and people start tearing others to shreds for simply needing a hand."

Really??? I must move in the wrong circles - I don't know anyone with this attitude. But then, I believe in helping those that need help, so I guess like attracts like.

Commenter

Tracey

Location

Melbourne

Date and time

November 26, 2012, 3:43PM

Mick I disagree. The only difference between welfare and charity is that one is controlled by the government, the other is controlled by private enterprises (can charities be enterprises? you know what i mean). Before welfare we ONLY had charities, and those who use welfare and charity services are often the same people - those in need - so really, you're hating the same people. Yes of course there are those who abuse the system, but they are by far and large a minority. 99.9% of those who receive welfare genuinely need it.

Tracy, obviously it depends on your social circles. I also socialise with like-minded, generous people as a general rule, but that doesn't mean the rest of the world think like we do. You'd be surprised how many people would rather see the poor suffer.

Commenter

Miffy

Date and time

November 26, 2012, 7:56PM

@Mick

Philanthropy is laudable, but welfare is a necessity in a capitalist society to at least partially redress the unjust imbalance that occurs.It's always superior to philanthropy. People in need of assistance should be able to receive it,so long as they can show their need. This doesn't happen with philanthropy,as the donation is totally dependent on an individual's decision, thus open to prejudice.

As for your claim about welfare cheats,well, the list of cheats in the corporate and business world is longer,and last time I heard, no welfare cheats brought the global economy to the point of meltdown. The amount of money lost to the small number of welfare cheats is tiny compared to the amounts of money lost to corporate and business cheats.

Commenter

Snicker

Date and time

November 27, 2012, 9:21AM

"...what inspires super-rich people to give most of their money away? Is it guilt, glory or simply the joy of giving?" First of all, super-rich people do not GIVE money away, they are RETURNING the money. Second, they do realise that the end is coming rather sooner than expected and they might have to push the heavy boulder for quite some time (eternity) and hope to buy their way out. Unfortunately for them, they don't realise that eternity does not follow a capitalistic system and it might be totally futile.There is a way out, read the Bible and it clearly states...give ALL your money and possessions and follow a different life style, otherwise BOULDER IT IS; rather hot and not many restaurants around there...hehehe.

Commenter

Dan

Location

Sydney

Date and time

November 26, 2012, 10:56AM

I'll bet there are a lot of rich people out there who are not religious at all. I'll also bet that they are just as likely to give money away as the religious rich, so why? Probably because it makes them feel good, it gives them a feeling of meaning and purpose to see the money creating good outcomes and helping others. Selfishness is not conducive to happiness and they've learned this from personal experience.

Commenter

carrot rather than stick

Date and time

November 26, 2012, 1:51PM

Again, I have trouble with the word..."Give"! they're not 'giving' anything away, they are Returning the money and much more is due to be returned, which of course in the end they will. I wouldn't mind if they made all their billions by themselves, either by innovation or servicing a need of society etc, but we need to be clear, they don't do it by themselves. They use and often abuse society's resources, human, capital and others. Many hard working people in an organisation deserve the recognition and the money yet we often allow one person to take all the credit. Why? Simply because he/she came up with an idea? Society in all its greatness & complexity has allowed them to reach the highs, they would have never reached these levels alone. We have allowed these kind of people to collect billions upon billions, not pay their share of taxes and yet many children don't get a decent education; I really see it as a totally mad society, insane to the core and a self-destructive one.

Commenter

Dan

Location

Sydney

Date and time

November 26, 2012, 2:31PM

Dan, if these ideas that drive new industries, create hundreds of thousands of jobs, etc, are such simple things to come across and actually belong to the general public, then I will gladly accept the percentage I am entitled to when you become a billionaire yourself. I think it is foolish and selfish for the ultra rich to hold onto money they have no use for when they can do good with it. But are they obliged to do good with it? Are they "returning" vs "giving" away money? I don't think the answer is as pat and simple as you put it. Buffet made his money from being a skilled investor. If he only invested enough to make, say, $75,000 a year would he be obliged to "return" it to the people? If not, where is the threshold when money we earn stops belonging to us? We probably agree that not all people really deserve the money they make (as with most executives, bankers, etc), but is that who we're talking about here?

Commenter

Jon

Location

reality

Date and time

November 26, 2012, 3:56PM

Dan, I pretty much agree with what you're saying. As Jon pointed out, at what level should people start "giving back'? At $75,000 per annum salary, or more? It's up to every individual to decide for themself, but I'd say that once you have enough to live quite comfortably (good accomodation, kids school fees paid, enough super to live comfortably in your old age, the odd nice holiday) you should seriously be thinking about giving back some of that surplus to society. Anyone owning several million or more would definitely be in that category in my view.